A Florida jury has awarded $12.4 million to the owners of a West Des Moines, Iowa, apartment complex in a premise liability lawsuit. The owners sued the apartments’ builders over leaks and mold that the owners said took years to correct. This is believed to be one of the largest jury verdicts of its kind in state history. The verdict marked the culmination of almost decade-long litigation involving the construction of the Westlake apartments and condos, a 300-unit complex built at on the Dallas County side of West Des Moines during the pre-recession housing boom.
The jury found that National Surety, which insured the companies that built the apartments, had to pay the insurance claim to Westlake Investments LLC, a West Des Moines company that is owned by a father-and-son team, Maurice and James Sinclair. National Surety is expected to appeal the verdict.
Construction of the Westlake apartments began in 2002. A St. Louis-based company called CCC/MLP built the complex. Upon completion in 2003, the company sold it to the Sinclairs’ company for $23 million, and the Sinclairs intended to sell the units as condos. At the time, demand for condos was strong and banks were most eager to provide financing. Westlake Investments took control of the property in November 2003 and by the following spring noticed water leaking into more than 100 units. It was alleged that the water ruined carpets, walls and furniture, caused mold and prompted the removal of entire sections of outer walls in the units. Two factors were believed to have led to the apartments being constructed in a way that did not properly repel water:
- The general contractor Pioneer Construction, an arm of CCC/MLP, had not built apartments in an area with winters as harsh as Iowa’s and did not use the appropriate materials for the climate. That included exterior stone that uses no mortar and can be permeated by water.
- There was such a demand for housing at the time that the contractors and subcontractors were in a rush to move on to other jobs. Eckley said subcontractors improperly installed the material behind the outer stone walls that should have repelled water.
Westlake is a mix of apartments and condos. The Sinclairs sold about 80 units before the leaks derailed their plans. It appears the owners were unable to find where the leaks were coming from and it took more than three years to repair the leaks. In 2008, Westlake Investments filed suit against several entities involved in the construction, including CCC/MLP and Pioneer Construction.
In 2011, CCC/MLP and Pioneer Construction agreed to a settlement with Westlake for $15.6 million and they assigned responsibility for the payment to National Surety, which had provided excess liability insurance for CCC/MLP and Pioneer Construction during the construction of the apartments. But National Surety denied that it was responsible for the claim. Of the $15.6 million settlement, $3.2 million has already been satisfied from other sources, according to the verdict. The settlement covers about $3 million in previous repairs, about $6 million in expected repairs and maintenance, and about $6 million in lost revenue.